Ofcom: Openreach status quo not an option

December 1, 2015

Interviewed as its annual Connected Nations report is published, Ofcom’s chief executive, Sharon White said the status quo between BT and its subsidiary Openreach, which provides the infrastructure connecting people to the internet, is unlikely to continue.Ofcom is currently reviewing the company’s provision of ‘superfast’ broadband.

Critics of BT say it has not invested enough in Openreach and want it sold. White said one option was “the structural separation” of Openreach from BT. White explained this was among four possible options being explored. They are:

Whether to maintain the status quo which she said was “unlikely.”

More deregulation.

The “structural separation” of Openreach and BT – in particular whether Openreach could be spun out more fully from BT.

Adjusting the existing system to make it “more fit for purpose”. That could include improving services, repairs, and laying new superfast lines.

BT is responsible for connecting almost all households to the network regardless of their service provider, as well as improvements to and maintenance of the network.

Ms White said the UK was doing fairly well in rolling out superfast broadband compared with other major European economies which suggests a split is not a foregone conclusion.

But she said it was unacceptable that 2.5 million homes did not have access to minimal broadband speeds of 10 megabits per second.

The UK government has promised that internet providers will be legally obliged to provide this speed to everyone who wants it by 2020.

Ofcom completed the first phase of its digital communications review in the summer and is expected to report its recommendations next year.

The Connected Nations 2015 report – showing good progress on the availability and take-up of communications services, which are now crucial in people’s personal and working lives. However, the report recognises there is still more to do, particularly in improving broadband and mobile availability and quality of service for consumers and businesses around the country.

The coverage and quality of fixed broadband services across the UK has increased markedly over the past year. More than a quarter of homes (27 per cent, or 7.5 million) now have ‘superfast’ broadband – with a connection of 30 Mbit/s or more, up from one in five (21 per cent, or around 6 million homes) a year earlier.

Superfast broadband is now available to over eight in ten UK homes (83 per cent, almost 24 million), up from 75 per cent last year. This has partly been driven by BT rolling out its fibre network, Virgin Media converting more homes to faster packages, and the Government’s on-going Broadband Delivery UK programme extending superfast into areas not covered by the commercial market. Broadband in rural areas also continues to improve, with superfast broadband now available to almost four in ten premises across the UK (37 per cent, or 1.1 million). The way people use superfast broadband is also changing. Ofcom has found that, for the first time, users with speeds above 40 Mbit/s are downloading significantly more data. This suggests that people are getting much more out of faster connections, through greater use of bandwidth-hungry services such as catch-up TV, online film rental and video calls.

However, Ofcom has identified challenges in improving coverage across the UK. Around 8 per cent of UK homes – around 2.4 million – are currently unable to receive broadband speeds of 10 Mbit/s or above. This jumps to around half (48 per cent, or 1.5 million) in rural areas, where speeds are often affected by premises lying further from the network’s local street cabinet or local telephone exchange. Superfast services are now available to the premises of almost seven-in-ten small and medium sized enterprises or SMEs (68 per cent, almost 900,000) – up from 56 per cent in 2014.

However, almost a half of SMEs (around 130,000) in areas like business parks are unable to receive speeds above 10Mbit/s. Ofcom estimates that by 2017, when 95 per cent of all UK premises will have superfast broadband, around 18 per cent of SMEs will still not have access to a superfast service. Ofcom is working closely with the Government and industry to meet these challenges and improve coverage for all Internet users.

Ofcom is providing technical advice to Government to inform its plans, announced in November, for every home and business to have a legal right to request a broadband connection of 10 Mbit/s by the end of the current Parliament. Ofcom is also working to remove barriers for smaller providers to invest in new network deployments, which often serve areas with little or no existing coverage. Faster broadband means consumers can connect more devices to the Internet at the same time, particularly on Wi-Fi where a connection can be shared throughout the home. A 10 Mbit/s connection remains the tipping point, after which most people rate their broadband experience as ‘good’, according to the report.

Looking further ahead, industry and policy makers are considering what networks are needed to support the next generation of superfast services. The report finds ‘ultrafast’ broadband, which Ofcom defines as a speed greater than 300Mbit/s, is available to 2 per cent of properties – some 500,000 homes. Ofcom has also published its latest European Broadband Scorecard, which compares the availability, usage and price of broadband services across EU member states.

The scorecard shows that, among major European nations, the UK has the best coverage and take-up of superfast broadband, the highest coverage of fast mobile services, and some of the cheapest prices. More than seven in ten premises (73 per cent) can now receive a 4G signal from three of the four networks, up from 44 per cent last year, as operators continue to roll out faster mobile broadband. Four in ten (46 per cent) have 4G coverage from all four major operators. Ofcom expects this to increase significantly in the coming year, and has put in place rules to ensure that 98 per cent of premises can receive a 4G signal indoors by 2017.

However, Ofcom’s Connected Nations report shows there is more work to be done on mobile coverage and quality of service. While 99 per cent of premises can receive a 2G signal, the proportion of the entire UK landmass able to receive a signal from all four operators has remained at 55 per cent since last year. This is expected to increase following an agreement between the Government and all major operators for them to achieve 90 per cent geographic coverage of voice services by 2017.

Ofcom has enhanced its Mobile Coverage Checker, which lets people zoom to any location on the UK map to receive coverage data for each mobile network, down to 100 square metres. The improved map is designed to support consumers in choosing a service that best suits their needs, while promoting competition between mobile operators.

Sharon White, Ofcom Chief Executive, said: “Mobile and broadband have become the fourth essential service, alongside gas, electricity and water. There’s been a technological revolution over recent years, with 4G mobile and superfast continuing to extend across the country. Our challenge is to keep supporting competition and innovation, while also helping to improve coverage across the country – particularly in hard-to-reach areas, where mobile and home internet services need to improve. It’s vital that consumers have the tools they need, such as the new Wi-Fi Checker, to get the most out of their communications.”